LONDON (Alliance News) - ARM Holdings and Sky are leading blue-chip gainers early Tuesday, as the London market has followed a strong lead from Wall Street and Asian markets to open higher.
ARM, up 4.4%, reiterated it expects to "at least" meet current market expectations for dollar revenue in 2015, as it posted a rise in pretax profit in the first quarter of the year.
Sky, up 4.0%, posted a rise in operating profit for the first nine months of its financial year, as customer growth across its businesses and strong performances from the UK and Ireland and from Germany helped bolster revenue.
Associated British Foods leads FTSE 100 fallers, down 2.6%, after it reported a drop in profit in the first half of its financial year as its food business, particularly AB Sugar, made lower sales.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.5% at 7,087.79
FTSE 250: up 0.7% at 17,719.41
AIM ALL-SHARE: up 0.2% at 750.19
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Hang Seng: up 2.6% at 27,784.64
Nikkei 225: closed up 1.4% at 19,909.09
DJIA: closed up 1.2% at 18,034.93
S&P 500: closed up 0.9% at 2,100.40
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GBP: down at USD1.4867
EUR: down at USD1.0679
GOLD: down at USD1,195.04 per ounce
OIL (Brent): down at USD62.88 a barrel
(changes since end of previous GMT day)
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ECONOMICS AND GENERAL
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Tuesday's Key Economic Events still to come
(all times in BST)
10:00 Germany ZEW Survey
10:00 EU ZEW Survey
13:30 Canada Wholesale Sales
13:55 US Redbook index
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The Conservatives pushed into the lead in one poll and retained top spot in another on Tuesday, as two polls of polls now have the party in a marginal lead ahead of the UK General Election next month. Both the BBC and Sky News polls of polls. In both the BBC and Sky polls, the Tories are at 34% to Labour's 33%.
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The UK government's Department of Energy and Climate Change said it will force LetterOne, the investment vehicle controlled by Russian billionaire Mikhail Fridman, to sell a dozen North Sea oil field stakes. LetterOne will be given three months to comply with the order or lose the operating rights for the fields. LetterOne acquired the fields in March as part of a EUR5.1 billion acquisition of the oil and gas arm of German utility RWE.
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EU foreign and interior ministers gave their political backing to a 10-point action plan to counter deadly migration flows in the Mediterranean Sea, drawing lessons from what could prove to have been the most deadly shipwreck in recent years. Their meeting came less than 48 hours after the capsizing of a vessel off the coast of Libya, in which more than 900 migrants are feared to have died. Previous tragedies in the Mediterranean have prompted pledges but little action to tackle migration, which is a touchy subject in the 28-member EU.
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China officially unveiled free trade zones in the northern city of Tianjin and the southern provinces of Guangdong and Fujian, 18 months after the first such zone in Shanghai. Meanwhile, the Shanghai zone, which has been more than quadrupled in size since it was established, would further open its service and manufacturing industries, the Xinhua news agency reported Tuesday.
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The leading index for Japan, which measures the future economic activity was revised down in February, final figures from Cabinet Office showed. The leading index fell to 104.8 in February, revised from the preliminary estimate of 105.3. In January, the score was revised to 105.0. At the same time, the coincident that reflects the current economic activity fell to 110.7 in February, revised from 110.5 in the flash report. In the previous month, the reading was revised to 113.2.
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Members of the Reserve Bank of Australia's monetary policy board said that the monetary policy currently in place is appropriate, minutes from the bank's April 7 meeting revealed. The members added that the Australian economy continues to grow slightly below trend, although the lower Australian dollar will give the economy a boost.
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BROKER RATING CHANGES
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BARCLAYS CUTS ANGLO AMERICAN TO 'UNDERWEIGHT' ('EW') - TARGET 950 (1080) PENCE
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BARCLAYS CUTS RIO TINTO TO 'EQUAL WEIGHT' ('OW') - PRICE TARGET 2850 (3350) PENCE
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UBS INITIATES ST JAMES'S PLACE WITH 'NEUTRAL' - TARGET 989 PENCE
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UBS INITIATES STANDARD LIFE WITH 'NEUTRAL' - TARGET 482 PENCE
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UBS RAISES INVESTEC TO 'BUY' ('NEUTRAL') - TARGET 688 (590) PENCE
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COMPANIES - FTSE 100
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ARM Holdings reiterated it expects to "at least" meet current market expectations for dollar revenue in 2015, as it posted a rise in pretax profit in the first quarter of the year driven by strong growth in mobile chip demand. The chip designer posted a pretax profit of GBP103.4 million, up from GBP78.0 million in the first quarter of 2014, as revenue grew to GBP227.5 million from GBP186.7 million.
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Anglo-Australian mining giant Rio Tinto reported that its global iron ore production for the first quarter grew 12% from last year, reflecting the expansion of its mining operations in the Pilbara region. However, iron-ore production declined 6% from the preceding fourth quarter. Rio Tinto, the world's second-largest iron-ore producer, said global iron ore production for the first quarter increased 12% on a 100% basis from last year to 74.7 million tons, with Rio Tinto's share increased 14% to 59.4 million tons. But the company's iron-ore production declined 6% from the preceding fourth quarter. Iron ore sale accounts for roughly 90% of the profit of Rio Tinto.
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Associated British Foods reported a drop in profit in the first half of its financial year as the food business, particularly AB Sugar, made lower sales due to food price deflation and the strength of sterling. The group reported a 51% drop in pretax profit in the 24 weeks to February 28 to GBP213 million from GBP434 million the year before, but a revenue increase of 1% to GBP6.2 billion. AB Foods said that while it made "significant progress" in operating profit for Primark, Agriculture and Ingredients and further improvement in the Grocery division's margin, profitability at AB Sugar was substantially lower as a result of much weaker EU sugar prices.
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Sky posted a rise in operating profit for the first nine months of its financial year, as customer growth across its businesses and strong performances from the UK and Ireland and from Germany helped bolster revenue. The pay-television provider posted an operating profit of GBP10.3 billion in the nine months to the end of March, up from GBP854 million a year before, on revenue growth to GBP8.45 billion from GBP8.05 billion. In the UK and Ireland, revenue was up 6% to GBP5.82 billion from GBP5.49 billion, while revenue in Germany was up 9% to GBP1.04 billion from GBP951 million, offsetting a slight decline in Italy where revenue fell to GBP1.59 billion from GBP1.61 billion.
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Vodafone Group said it has signed a collaboration deal with MTN Group that will allow the companies' customers to transfer money to each other using their mobile wallets. The deal covers Vodafone M-Pesa customers in Kenya, Tanzania, Democratic Republic of Congo and Mozambique, and MTN Mobile Money customers in Uganda, Rwanda and Zambia.
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COMPANIES - FTSE 250
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Outsourcer Serco Group has been stripped of its contract sterilising equipment at a hospital in Australia, the Financial Times reported. Western Australia Health Minister Kim Hames took the contract away from Serco on Monday after blood and tissue was found on sterilised equipment at the Fiona Stanley hospital in Perth, which opened last year. Hames also has initiated a further review into clinical healthcare at the hospital. Serco does retain the bulk of the GBP850 million, ten-year deal to provide non-clinical services to the hospital. It had already received two breach notices related to its sterilisation services.
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Tate & Lyle reported its exit from the substantial part of its European Bulk Ingredients business and the re-structuring of its SPLENDA Sucralose business to further focus on and strengthen Speciality Food Ingredients. The company has signed an agreement with Archer Daniels Midland to re-align their Eaststarch corn wet milling joint venture in Europe. Eaststarch CV is ADM's 50-50 joint venture with Tate & Lyle. ADM will take full ownership of corn wet mills in Bulgaria and Turkey, and will own a 50% stake in a wet mill in Hungary. Tate & Lyle will receive a cash consideration of EUR240 million. Tate & Lyle will acquire full ownership of the more speciality-focused plant in Slovakia.
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Consumer credit company International Personal Finance said Polish authorities have concluded an investigation into the calculation of fees for loan products and it will not face a fine following the probe. IPF said the Polish Office of Consumer Protection and Competition has concluded that Provident Polska, IPF's Polish business, has made the required commitment to replace variable administrative and home service fees on loans with fixed rates by the implementation deadline of August 1 set by the regulator.
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Publishing and events company Informa said it is maintaining its full-year guidance after a solid trading performance in the first quarter. The FTSE 250-listed company said underlying growth in the first quarter to the end of March was solid, though including one-off non-annual events and the planned movement of events between quarters, revenue fell 0.5%.
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Amec Foster Wheeler said it has been awarded a contract from Hyundai Engineering Co Ltd for the design and supply of two 150 megawatt circulating fluidized-bed steam generators to another company in the Philippines. The FTSE-250 listed oil and gas service company said the steam generators will be supplied to Therma Visayas Inc, a subsidiary of Aboitiz Power, for a new power plant located in the central province of Cebu.
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Pets at Home Group reported growth in revenue for its recently completed financial year as it saw sales rise in all areas of its business, and said its full year underlying earnings before interest, tax, depreciation and amortisation are expected to be in line with market consensus. In a trading statement, the pet products and services company reported sales growth of 9.6% for the year ended March 26 to GBP729.1 million, and like-for-like sales growth of 4.2%, driven by strength in advanced nutrition, health and hygiene, VIP club, services and omnichannel.
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COMPANIES - LONDON MAIN MARKET AND AIM
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Utilitywise reported a rise in pretax profit for the first-half of the financial year after revenue from its core Enterprise division experienced a significant rise, prompting the company to raise its interim dividend. The independent utility cost management consultancy also said it has agreed to acquire cloud-based technology provider, t-mac Technologies, for up to a total of GBP22 million. The results led the company to raise its interim dividend to 1.7 pence per share compared to the 1.1 pence per share paid a year earlier.
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Discount footwear retailer Shoe Zone issued a profit warning, saying the warm weather conditions during the autumn/winter trading period have slowed its first half revenue. Shoe Zone said that while overall footwear sales volumes improved in the first half of its financial year to April 4, the average price of products sold was lower owing to a different product mix, giving the example of lower-priced ladies ankle boots being favoured over more expensive long leg boots.
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Carpetright said it expects to report a pretax profit for the financial year that's about to end above market expectations, as a sustained recovery in UK sales and a continued improvement in the rest of its European business is driving strong trading in the fourth quarter of the year. The carpet and floor coverings retailer said it expects its pretax profit excluding exceptional items and any related tax to be about GBP13 million in the year that ends May 2, which would be almost triple the GBP4.6 million it reported in its last financial year.
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Immunodiagnostic Systems Holdings said it expects its full-year revenue to be lower year-on-year, in line with its guidance, driven by lower automated revenue and a significant fall in manual revenue.
The company, which provides clinical laboratory diagnostic services, said it expects revenue for the year to the end of March to be GBP45 million, down from GBP52 million a year earlier and in line with the guidance it gave in September, when the group said its revenue would miss expectations due to a low level of net placements.
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Asia Resource Minerals said its board will meet promptly to consider a potential takeover offer from Nat Rothschild's NR Holdings and SUEK, as the battle for control of the company continued to heat up. NR Holdings and SUEK had said Monday they are considering a possible cash offer to acquire Asia Resource Minerals, conditional on shareholders voting in favour of recapitalisation backed by Rothschild, rivalling a potential takeover offer from Asia Coal Energy Ventures. SUEK is the holding company for Russian coal producer OJSC Siberian Coal Energy Co.
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International Greetings said it expects its results in the financial year that just ended to come in ahead of expectations, and confirmed it plans to start paying a dividend again on the back of its strong trading performance.
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COMPANIES - INTERNATIONAL
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Swiss lender Credit Suisse Group said first-quarter reported net income climbed 23% to CHF1.1 billion from CHF859 million in the previous year. Reported net revenues grew 3% to CHF6.673 billion from CHF6.469 billion last year. According to the lender, Wealth Management Clients generated a particularly strong result, with improved margins, increased profitability and good net asset inflows from key growth regions.
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Wells Fargo & Co is in talks to buy all or part of General Electric Co's biggest lending operation, according to reports. The reports noted that General Electric is selling the portfolio consisting of USD74 billion of loans to US businesses. GE reportedly is in talks with Wells Fargo as well as other bidders, the people said. Further details, including a possible price, weren't available.
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International Business Machines said its first quarter profit fell 2.4% from last year, as improved margins could not offset a 12% decrease in revenue. However, the company's quarterly earnings per share, excluding items, came in above analysts' expectations, but its quarterly revenue fell short of analysts' forecast. At the same time, the company reiterated its full year operating earnings outlook.
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SAP reported that its profit attributable to owners of parent for the first quarter ending March 31, 2015 declined to EUR414 million from the prior year's EUR534 million, with earnings per share decreasing to EUR0.35 from EUR0.45 in the previous year. First quarter non-IFRS cloud subscriptions and support revenue grew 131% year-over-year (95% at constant currencies). New cloud bookings, the key measure for SAP's sales success in the cloud, increased 121% in the first quarter to EUR120 million.
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Tuesday's Scheduled AGMs/EGMs
Domino's Pizza
Telecity
Genel Energy
Herald Investment Trust
Premier Energy & Water Trust
Progressive Digital Media
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By Tom Waite; thomaslwaite@alliancenews.com; @thomaslwaite
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